Life insurance is a contract signed between a policyholder or insured person and an insurance provider. This contract determines a specific and pre-decided sum (also known as “Cover Amount or “Sum Assured”) to be paid to the policyholder’s family after his/her death. The sum of the insurance policy is paid in lieu of a certain amount of premium.
The plan ensures that you as well as your family members are able to receive the much-needed financial support in case of your untimely demise due to any reason, such as accident, critical illness, and so on. Despite the fact that human life cannot be quantified, a monetary sum can assist the dependents in continuing their lives without abandoning their necessities and requirements.
One of the most popular life insurance plans is term life insurance. It lasts for a set amount of time and then expires at the end of the term. The best part about a term plan is that the premiums are reasonably priced.
Because the premiums are cheap, these plans are suitable for persons who have just put their initial steps in growing their careers. The plan pays out a fixed amount in case of the demise of the insured person within the tenure.
A life insurance plan also acts as a saving instrument by providing maturity benefits. In case the policyholder lives to the end of the policy term without any claims, the total amount of premiums is refunded at the policy’s maturity time. For example, if you pay a yearly premium of Rs. 10,000 for a 30-year term insurance policy, you would receive the premium money back (Rs. 3,00,000) along with the bonus amount. This is only when you survive the policy tenure and you have paid all of your premiums.
There are some life insurance policies that offer two lucrative benefits of both insurance and investment. This simply means that one part of your premium goes towards insurance and the other part is invested in debt, equity, etc. With a strong protective covering and higher returns on your investments, you certainly get the best of both options.